Q3. Lease concepts; finance leases/sales type lease; guaranteed and unguaranteed residual value

Each of the four independent situations below describes a direct financing lease in which annual lease payments of $100,000 are payable at the beginning of each year.

		Situation
		1	2	3	4
	The lessors:
	1. Lease payments
	2. Gross investment in the lease
lease receivable (PV of Gross investment in the lease	3. Net investment in the lease
	The lessees:
	4. Lease payments
	5. Right-of-use asset
	6. Lease liability
	pv factor annuity due
	pv factor of single amount

1 1 8 9% Situation 2 3 8 7 11% 10% 4 7 12% Lease term (years) Lessor's and lessee's discount rate Residual value Estimated fair value Guaranteed by lessee 0 0 $30,000 0 $10,000 $10,000 $30,000 $50,000